Take a look at the front page of the Seattle Times website this morning:
That’s Coalition warns of “mortgage tsunami”, followed by Accounting, executives at lender New Century investigated, Fraud charges at Metropolitan Mortgage & Securities settled, and of course Mess unlikely to break economy.
First off, I don’t think the term “mortgage tsunami” is appropriate, since a tsunamis come with little warning and through no fault of those in their path. I’d call it more of a “mortgage harvest,” considering that the mortgage banks and homebuyers are simply reaping what they have sown.
And why is it that they would like us to believe that the ongoing mortgage “mess” is not going to “break” the economy?
However, while stocks of subprime lenders have been pummeled, the industry’s effect on the broader market is likely to be muted. “All told, subprime mortgages are worth about $640 billion, and that isn’t chump change,” says Bob Gay, economist and managing partner of Fenwick Advisers. “However, it’s only 0.6 percent of annual gross domestic product. … On the consumer side, it’s not like every subprime mortgage is going to default and get repossessed.”
Delightful. An argument that basically amounts to “because we say so.”
Hold on tight and enjoy the ride, everybody.